Based on company records of similar equipment, a consulting aerospace engineer at Aerospatiale estimated AW values for a presently owned, highly accurate steel rivet inserter as shown. A challenger has ESL = 2 years and AWC= $−41,300 per year. The MARR is 12% per year.If Retained ThisNumber of YearsThe AW Value Is,$ per Year1−62,0002−51,0003−49,0004−53,0005−70,000 If the consultant must recommend a replace/retain decision today, should the company keep the defender or purchase the challenger?The company should (Click to select) keep the defender purchase the challenger .

A choice about the capital budget is both a financial commitment and an investment. Taking on a…

Answered: Based on company records of similar…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Based on company records of similar equipment, a consulting aerospace engineer at Aerospatiale estimated AW values for a presently owned, highly accurate steel rivet inserter as shown. A challenger has ESL = 2 years and AW_C= $−41,300 per year. The MARR is 12% per year.

If Retained This Number of Years	The AW Value Is, $ per Year
1	−62,000
2	−51,000
3	−49,000
4	−53,000
5	−70,000

If the consultant must recommend a replace/retain decision today, should the company keep the defender or purchase the challenger?

The company should (Click to select) keep the defender purchase the challenger .

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